Trustless Bitcoin Vaults via BitVM3
Bitcoin is the largest crypto asset, yet less than 1% is used in decentralized finance (DeFi), largely due to the absence of trustless bridges. Existing bridges are either centralized or require strong trust assumptions, as Bitcoin’s scripting language lacks covenants. We overcome this by introducing trustless Bitcoin vaults: self-custodial on-chain contracts that lock BTC to specific external protocols. Withdrawals are permitted only upon verification of zero-knowledge proofs of external smart contract states, removing the need for trust. This design enables native Bitcoin—without wrapping or bridging—to serve as collateral for lending, stablecoins, and perpetual DEXs. Using BitVM3, we show these vaults operate with minimal on-chain overhead, supporting scalability.